Net financial claims of non-resident Indians (NRIs) against India fell in the fourth quarter of FY25 by USD 34.2 billion. The total amount of claims declined from USD 364.2 billion at the end of December 2024 to USD 330 billion as of March 2025, according to the Reserve Bank of India's (RBI) International Investment Position (IIP) data released on June 27, 2025.
Notably this is among the sharpest quarterly falls on record and is a proof of a growing trend of Indians increasing their financial footprint beyond India’s geography. The numbers also reflect an emerging trend, with non-residents' investment abroad now exceeding foreign claims against Indian assets.
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What Caused the Decline
The reduction in net NRI claims was driven by a sharper increase in Indian residents' external financial assets compared to the increase in foreign-owned assets in India. During the January-March 2025 quarter, Indian residents' external financial assets increased by USD 60 billion, while foreign-owned assets in India rose by USD 25.8 billion. The difference of USD 34.2 billion explains the fall in net NRI claims.
Accroding to the data released by RBI, during the January–March 2025 quarter, Indian residents' foreign assets grew by USD 60 billion, while foreign assets in India rose by USD 25.8 billion. This widening difference shows that there is more Indian money leaving than foreign money entering.
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External assets comprise a basket of holdings such as Indian companies' foreign direct investment, foreign bank deposits, portfolio investments, and RBI reserve assets. Foreign liabilities comprise inward loans, foreign direct investment in local businesses, and portfolio investments by overseas investors.
Trends in Assets and Liabilities
The dramatic increase in foreign assets was led by a rise in reserve assets, which contributed to more than half of the increase. These are central bank holdings of foreign currency that aid in exchange rate stability and external shocks. Other factors that added to the rise in assets were Indian companies' direct investment abroad and a rise in foreign bank deposits by Indians.
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On the assets side, it was a modest rise, which was led mainly by foreign loans provided by Indian parties and fresh direct investment by non-residents. Though foreign investment remained steady, it was nowhere near matching the pace of Indian outward investment. This change in balance has resulted in the net position of non-residents' claims going down overall.
Full-Year Perspective
On the whole financial year basis, non-resident claims on India declined by USD 31.2 billion. External financial assets rose by USD 105.4 billion in FY25, whereas foreign liabilities rose by USD 74.2 billion, showed RBI data. The trend in the last quarter is consistent with the overall trend for the year: rising Indian foreign investment versus foreign investment in India.
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This is also reflected in India's asset-liability ratio. India's external financial liabilities as a percentage of assets stood at 77.5 per cent as of March 2025, from 74.8 per cent as of December 2024. This reflects India's net financial exposure to the world economy has reduced.
What It Means for the Economy
The rising foreign investment by Indian citizens can be seen as a sign of increased global integration and optimism. It reflects the desire of Indian businesses and citizens to diversify their portfolios, go abroad to create a hedge against domestic market risks.
As it happens, it is also a concern for Indian economy. As long as foreign capital continues to flow in to India, reduced growth in foreign inflows compared to the growth in outward flows can be an indicator of prudence on the part of foreign investors.
